It isn't. Don't think of it like one.

"But houses always go up."

Riddle me this: If a random house in a neighborhood were actually a good investment, why is the bank lending money to you instead of buying it outright?

This isn't outside of their wheelhouse. Most major banks actually do leasing as well as lending for major, not so cheap equipment. These items tend to be things that are priced higher than your house. They could, so they desired, buy out a brand new suburban development, dole out management responsibilities to a property company, and have you lease it for the entire life of the house.

Why don't they do that?

Because home ownership is actually pretty expensive and you aren't getting away with as much as you think you are. The bank can skim significantly more money off of you through lending than by leasing.

Very very rough napkin math

Let's say you bought a $150,000 home a five years ago. You took good care of it throughout that entire time and made it your own. Today, on the market, it's worth $200,000.

Woo! $50,000! That's a lot of profit...right?

Except about $10,703 of that alone is inflation. Your profit, all other things equal, is $39,297.

Except not all other things are equal. You suffered more costs than that.

Over the course of those 5 years, you were bleeding interest payments from your bank. Let's say you did a standard 20% down, and were on a 4.31% interest loan. You lost roughly $24,343 to the bank. Your actual profit is now $10,954. It's no wonder the financial instrument you used to get your house is literally named a "Death pledge".

Over the course of those 5 years, how much did you have to pay in maintenance and replacement? Let's used the 1% rule and say that you had $1500/year set aside to be used for house maintenance, which you had to use because you are both unlucky and lack the skills to repair things yourself. If that's unbelievable, let's say some of that budget was also used for cosmetic remodeling, too, that was part of the total added value. So it's really $3454.

And to sell your house, you went to a real estate agent, who charged you a standard 6% commission of your selling price. That's $12,000. Your house has overall made you a total profit of $1,034.

Ouch.

That's not even counting property taxes, or insurance, or even PMI, all of which would have put you solidly in the red. And the longer and larger your mortgage is, the worse you're actually in the hole. At some tipping point, you have to consider that you didn't really buy a house, you set up a capital lease rental with the bank in which, unlike an actual capital lease, the bank has bucked all the costs to you.

The only way you're making real money on your house is:

• If you paid in full, or provided a good deal of equity up front
• Bought it presciently in a location where property prices were about to explode, or bought it with defects and
• Are doing a good portion of the maintenance/update work yourself or possibly
• Leasing your property, especially as a series of leased properties

Otherwise, your house ought to be mostly considered a cost of living. There is no "good debt" in this case. It's only a "less bad" debt.

Don't let that necessarily deter you though.

What home ownership really gives you is the peace of mind that you are the master of your domain. That you can customize what you want, do what you want, and not have to worry about being accosted, or kicked out because the property owner's life plans have changed, or be kicked out because you have been placed in a rough spot.

However, to gain that freedom requires you to prepare and take some responsibilities, some of which might take away from other parts of your own life plans. If you're aggressively attempting to move jobs, for instance, a house might limit your ability to move to a place that minimizes your transportation costs. If you're not sure you're going to like the area, be careful, because you can be saddled into an area you dislike. There is a balance to be struck here.

Just don't feel like you need to follow the script, and purchase a big home, in a big neighborhood, fill it with big stuff, and live with big responsibilities. Consider your alternatives. A smaller house or apartment closer to your job might be more practical and enjoyable long term than one that requires a 1 hour commute. Maybe you don't really want a permanent living space yet; mobile homes and RVs might provide a more enjoyable experience for a few years before you consider settling down. Everyone is different.